Final answer:
The expected outcome of selling 125 tickets for a flight with 120 seats is potential overbooking, which aims to compensate for the average number of unoccupied seats but carries risks such as passenger inconvenience and associated compensation costs.
Step-by-step explanation:
Implications of Overbooking Flights
When an airline sells 125 tickets for a flight that has only 120 seats, the expected outcome is that there will be more passengers than available seats, assuming everyone shows up for the flight. This practice, known as overbooking, is based on statistical analyses suggesting that a certain number of passengers will not show up. Airlines rely on historical data, such as the mean number of unoccupied seats per flight (e.g., 11.6 from a sample of 225 flights with a standard deviation of 4.1 seats), to make predictions and optimize their bookings.
The implication of overbooking is a balancing act between maximizing revenue and the risk of inconveniencing passengers. While overbooking can prevent loss of revenue from unoccupied seats, it can also result in denied boarding for passengers, leading to potential compensations and reduced customer satisfaction. The airline must manage overbooking carefully to maintain a positive customer relationship while ensuring profitability.
Similar to how a band might handle an elastic demand for concert tickets, airlines adjust their pricing and capacity strategies to maximize sales. If an arena is fully booked, a band might consider moving to a larger venue to increase sales; similarly, airlines might adjust aircraft size or increase flight frequency to accommodate demand. However, if larger planes or more flights lead to substantial cost increases or if additional capacity isn't possible, airlines must carefully manage their overbooking strategies to meet demand without incurring substantial extra costs or harming customer experience.